Electronic payments in the form of credit card transactions and other alternatives payment methods are ubiquitous in the modern economy and are rapidly expanding into the furthest recesses of the developing world. Electronic payments provide numerous benefits in the form of added convenience and security. Unlike cash, means for conducting electronic payments are generally tied to a person's identity, which therefore adds an additional layer of security. However, electronic payments systems are exposed to their own forms of risk. A particularly virulent strain of these particular risks lies in the recent increase in the sophistication and prevalence of hacker attacks on secure systems.
Payment processors are a particularly appealing target for hackers because of the potential for monetary gains that may be obtained from spoofing the system into improperly transferring money out of the system. Sophisticated hackers have shown themselves able to modify the properties of a payment system to artificially increase the balance of an account and withdraw funds from the account before the administrators of the system are able to detect that the account has been compromised. Likewise, hackers have shown themselves able to remove funds from an account and then readjust the balance of the account to digitally cover their tracks.
While security is of paramount importance for electronic payment systems, security cannot be enforced at the expense of convenience. Indeed, there are heavy costs associated with enforcing security measures too strictly in that occasional false positive fraud detection events will deny, and inconvenience, a customer in a product space where consumer demand is almost entirely based on convenience. Methods and systems for limiting the cost of fraud in payment systems while maintaining convenience for users of a payment system are therefore of the utmost importance.